Although respected financial analysts consistently steer their clients away from penny stocks, they still attract new recruits. Obviously, the allure of quick riches represents a universal temptation. As well, the boost of adrenaline or other native stimulants that speculative ventures arouse may entice and addict passersby. Call it the horror-film fascination thesis.
To be fair, though, many blue chips that we recognize as such started life off as penny stocks. So, it’s possible to get rich off this high-risk activity. It’s just that it’s not probable. Sincerely, I hope you recognize the dangers involved before you press ahead. Still, since you’ve probably already made up your mind, let’s at least direct your attention toward fundamentally sound penny stocks. Please note, I mean fundamentally sound in a relative sense; that is, relative to deliberately setting fire to your portfolio. It’s a low standard.
If I haven’t scared you off, below are seven penny stocks (possibly) primed for huge moves in Dec.
As you might guess, Brasilagro (NYSE:LND) is based out of Brazil, with the company focused on the acquisition, development, operation, and sale of rural properties suitable for agricultural activities. At the moment, the enterprise features a market capitalization of 2.66 billion BRL, roughly translating to $496.3 million. Shares trade hands for $4.92 each, making it one of the higher-priced penny stocks on this list.
On a year-to-date basis, LND declined only 3.4%, likely based on relevant fundamentals. Despite myriad advances in technology over the last several decades, people still need to eat. In addition, the disruption of global food supply chains due to geopolitical flashpoints cynically bolsters the narrative for LND. With circumstances showing no sign of abating in the underlying conflict, LND could spike higher in December.
Financially, Brasilagro brings an enticing opportunity for speculators. For example, the company’s growth and profit trends rank in the upper half of the industry, particularly regarding the bottom line. As well, the market prices LND at 5.2 times trailing-12-month (TTM) earnings, making the investment undervalued.
Safe Bulkers (SB)
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Fundamentally, Safe Bulkers (NYSE:SB) may be one of the more agonizing penny stocks to decipher. That’s because of its core business. As a dry bulk vessel carrier, Safe Bulkers’ underlying industry represents a vital component of global commerce. However, with fears of global recession risks present, SB might not be the safest option available.
Then again, those that want to speculate that the bottom is in may find SB to be incredibly attractive. Recently, Barron’s published an op-ed that declared exactly that. To be clear, myriad risks remain on the table, including the Federal Reserve and its commitment to higher interest rates. Even the aforementioned article stated the risks associated with an economic slowdown.
Still, if you want to wager on SB, it will almost certainly attract contrarian speculators. Financially, the company features strong growth and profitability metrics. In addition, the market prices SB at only 1.8 times TTM earnings, well below the industry median of 11.9 times.
Retractable Technologies (RVP)
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One of the lesser-known enterprises even compared to other penny stocks, Retractable Technologies (NYSEAMERICAN:RVP) carries wildly absurd risks. This isn’t one of those psychological tricks where I tell you one thing but mean another. No, RVP – which trades hands at only $2.28 a pop – hemorrhaged nearly 69% of market value since the Jan. opener. You need to be careful with all these penny stocks. But it applies triply so for RVP.
Nevertheless, the underlying company provides intriguing fundamentals. Per its website, 320,000 needlestick injuries occur every year in the U.S. Fortunately, Retractable offers a viable solution to this underappreciated problem with its low dead space safety syringe technology. With flu season on the rise, Retractable may become incredibly relevant very soon.
Better yet, RVP enjoys solid financial metrics (though it’s still risky). For instance, the company features strong growth and profit margins. As well, Gurufocus.com identifies RVP as significantly undervalued, with shares currently trading at only 2.6 times TTM earnings.
Mind C.T.I. (MNDO)
One of the penny stocks I’ve discussed in the past for its surprisingly stout financials, Mind C.T.I. (NASDAQ:MNDO) represents a global provider of billing and customer care solutions for voice, data, video, and content services. Presently, the company features a market cap of $43.02 million. To be sure, MNDO presents hefty risks, shedding nearly 31% of equity value in the year so far.
Nevertheless, its fundamentals should appeal to contrarian traders. In particular, the company intrigues because it leverages advanced analytics to enhance customer care solutions. Let’s face it – amid the post-pandemic labor shortage, few folks want to take menial jobs such as customer care. With Mind’s platform, such work may enjoy higher efficiencies, boosting the MNDO’s relevance.
Now, the risk factor centers on a possible global recession materializing. In that case, analytics-based platforms may incur wider demand losses. Even so, Mind enjoys a strong balance sheet, backed by a stout cash-to-debt ratio of 17.7 times. Thus, it can weather an economic storm, a rather shocking attribute for penny stocks.
For those that take their penny stocks to the extreme, Appen (OTCMKTS:APPEF) might fit the bill. Before we get into the fundamentals, though, investors should recognize the structural challenges. Aside from its staggering loss of almost 78% YTD, APPEF struggles with ridiculously low average trading volumes. Therefore, you must exercise extreme caution with this company.
Still, the fundamentals bring intrigue for those willing to roll the dice. Appen provides or improves data used for the development of machine learning and artificial intelligence products. Data types include speech and natural language data, image and video data, text and alphanumeric data, and relevance data to improve search and social media engines.
What adds to the enticing package is the surprisingly resilient financials. For example, Appen features an equity-to-asset ratio of 0.79 times, beating out over 81% of the competition. Further, it commands a three-year revenue growth rate of 14.9%, ranked higher than over 68% of its peers.
Mandalay Resources (MNDJF)
A natural resource mining firm, Mandalay Resources (OTCMKTS:MNDJF) primarily focuses on gold production. While a hawkish monetary policy usually bodes poorly for precious metals, gold performed relatively well over the last several weeks. Likely, the yellow metal benefits from the fear trade. That said, those banking on this narrative should focus mostly on established mining firms.
Still, a case exists for penny stocks in this space, so long as you know what you’re doing. With many folks worried about global stability, precious metals may enjoy a meteoric spike. If so, it’s possible (though hardly guaranteed) that MNDJF could ride coattails. Currently, Mandalay shares enjoy substantial momentum, gaining 12% in the trailing five days and nearly 26% in the trailing month.
Further, Mandalay is not devoid of financial attributes. Most conspicuously, the company enjoys strong profit margins. As well, MNDJF trades for 3.8 times trailing earnings, which Gurufocus.com labels as modestly undervalued.
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Usually, when you discuss high-risk penny stocks, you don’t want your opinions to reside in an exclusive echo chamber. Fortunately, for mineral mining specialist Geodrill (OTCMKTS:GEODF), other experts identified the high-risk, high-reward venture as a hidden gem. Interestingly enough, GEODF gained 9.3% since the start of the year, which is a lot more than I can say about the benchmark S&P 500.
Unfortunately, Geodrill doesn’t do a great job of explaining what commodities its products extract. Per its website, the company operates 75 drill rigs and is a leading exploration drilling firm in Africa and South America. Still, with many countries rethinking their reliance on certain commodity providers (because of geopolitical tensions), Geodrill may enjoy cynical fundamental relevance.
Certainly, GEODF also attracts for its surprisingly resilient financial profile. The company enjoys a relatively stable balance sheet, with its Altman Z-Score of 4.1 reflecting low bankruptcy risk. As well, shares trade for 4.9-times forward earnings, which is undervalued compared to the industry.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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